Euro zone firms find it harder to get credit, ECB survey shows

Euro Zone Firms Struggle with Credit Amid Rising Costs, ECB Finds

ECB Survey Reveals Credit Challenges and Economic Pressures

FRANKFURT, Oct 26 (Reuters) - Euro zone firms are having a harder time getting credit from their banks just as their finances are squeezed by more expensive fuel and higher costs, a European Central Bank survey showed on Monday.

Interest Rate Hikes and Inflation Concerns

The ECB has been gradually raising interest rates to stem an energy-driven rise in inflation, though it is expected to stay put this week to garner more evidence on how higher borrowing costs, including on the bond market, are affecting the economy.

Survey Findings: Credit Becomes Scarcer

Its quarterly Survey on the Access to Finance of Enterprises in the euro area showed some strains were becoming visible, with firms reporting higher interest rates and a decrease in the availability of bank loans.

Firms said they needed more credit lines just as these were becoming harder to get.

Working Capital Pressures

"The continued simultaneous increase in the need for both trade credit and credit lines suggests that firms are facing broader pressures on their working capital, potentially driven by higher input costs," the ECB said.

Bank Caution and Short-Term Funding Constraints

"However, the decrease in credit line availability signals that banks are becoming more cautious in extending this type of financing, which could further constrain firms' ability to meet their short-term funding needs," it added.

Obstacles to Obtaining Loans Increase

The share of firms reporting obstacles to obtaining a bank loan increased to 7% in the three months to September from 5% in the previous quarter.

Expectations for Prices, Wages, and Costs

The survey also showed large increases in firms' expectations for prices, wages and other costs, but the ECB said this was skewed by a large number of first-time respondents.

Price Rise Expectations Among Firms

Firms that took part in both of the last two rounds of the poll expected prices to rise on average by 3.6% in the coming 12 months, compared with 2.5% in the second quarter's survey.

Full Sample Expectations

Across the full sample of 12,822 enterprises, firms expected selling prices to rise by 7.1%, compared with 3.2% in the previous poll.

(Reporting by Francesco Canepa; Editing by Andrew Heavens)